Yugoslav Inflation and Money

46 Pages Posted: 15 Feb 2006

Date Written: May 1991

Abstract

Yugoslav inflation unfolded as a classic wage-price-exchange rate spiral through the 1970s and 1980s and exploded into hyperinflation in the last quarter of 1989. This paper examines the process of monetary accommodation of inflation, the behavior of demand for money, and the interaction between the two in Yugoslavia. The asset-liability structure of the Central Bank, together with the policy stance on exchange and interest rates, led to a significant feedback from inflation to money supply. Real money balances are found to have been cointegrated with other economic variables despite their explosive and seasonal nature, and hence in long-run equilibrium relationship as economic theory would suggest.

JEL Classification: E31, E41, E52, E58, E63, H62, P22

Suggested Citation

Lahiri, Ashok Kumar, Yugoslav Inflation and Money (May 1991). Available at SSRN: https://ssrn.com/abstract=884821 or http://dx.doi.org/10.2139/ssrn.884821

Ashok Kumar Lahiri (Contact Author)

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